Oct 2015 Financial News

PPGPL rating downgraded

Oct 09, 2015

Phoenix Park Gas Processors Ltd (PPGPL) has had its corporate credit rating downgraded by a notch. The Caribbean Information and Credit Ratings Service Ltd (CariCRIS), said the natural gas producer’s rating was lowered from CariAAA to CariAA+ on its regional ratings scale. Meanwhile, its rating on the national scale has gone down from ttAAA to ttAA.

According to the ratings service, PPGPL’s ratings show that the company’s level of creditworthiness, when compared with that of others obligors, is high.

CariCRIS said PPGPL was able to maintain its relatively high rating because of likely support from its parent company, the National Gas Company (NGC), in the event of financial distress, low operating costs and low break-even prices and healthy debt servicing and liquidity metrics despite declining revenue and profitability.

However, the rating agency noted that the downgrade was in part fuelled by this decline in profitability, which it said affected other players in the market beside PPGPL. According to CariCRIS, this decline is in its third year and is expected to continue into 2015.

Other factors that have increased PPGPL’s risk profile, said CariCRIS, are low oil and gas prices internationally, persistent gas shortages in the upstream sector caused by under-investment in exploration and production as well as increased competition in its traditional markets.

The rating agency said additional factors that may impact on PPGPL’s rating in the near future are a further 20 per cent decline in sales over the next 12 to 18 months, continuing loss of its LPG market share and a change in the credit worthiness of its parent company NGC.

Source:
Trinidad Guardian
Friday October 9, 2015

http://www.guardian.co.tt/business/2015-10-09/ppgpl-rating-downgraded